Question
Tranter, Inc., is considering a project that would have a ten-year life and would require a $1,200,000 investment in equipment. At the end of ten
Tranter, Inc., is considering a project that would have a ten-year life and would require a $1,200,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows: All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 12%.
1. Compute the projects net present value.
2. Compute the project's internal rate of return to the nearest whole percent.
3. Compute the project's simple rate of return. Please show work. Thank you!
$1,700,000 | 1,200,000 500,000 Sales Variable expenses.. Contribution margin. Fixed expenses: Fixed out-of-pocket cash expenses Depreciation...... Net operating income... $200,000 120.000 320,000 $ 180,000Step by Step Solution
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